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The Ontario provincial funding rate for food for residents in long term care facilities, most of whom are seniors, has always been lower than seems reasonable. In 2014 the amount was $7.80 per person per day for the “raw food.” That number was so low that a public outcry managed to get a small increase to $8.33 per person per day. It’s been stuck there ever since, though, despite the rate of inflation for food and the drop in the value of the Canadian dollar versus the American dollar which affects the prices of imported fruits and vegetables. Reading an article in The Star made me wonder what I should budget for our food costs if the government believes that a person can eat healthily for $8.33 a day.

Why Does the Government Provide More Money for Prisoner’s Food Per Day than for Pensioners?

One fact has always been extremely upsetting in the provincial funding for food: the funds provided for residents in Long Term Care homes are lower, per person, than those for prisoners.

At first, it may seem vaguely reasonable. Aren’t more prisoners younger men who have a higher caloric need than most pensioners who are often older women?

But then you realize that more of the older residents have special dietary needs. You shouldn’t eat grapefruit, for instance, if you taking certain medications. If you are diabetic, you may need to carefully balance the amount of carbohydrates you eat at each meal. Overall, due to reduced ability to absorb nutrients, you need to maximize the amount of fruits and vegetables you eat to increase the likelihood of receiving proper nutrition.
And, of course, it seems “morally” wrong to feed wrong-doers better food than older or disabled persons.

In March 2017, the Ontario government is paying $8.33 per person per day for raw food costs for each resident in a long term care facility. It is paying $9.73 per day for prisoners.

That just seems unjust.

What Could I Afford at $8.33 Per Day for Raw Food Costs?

I realized that this question has an attached question: where am I living? If I live in the Greater Toronto Area in Ontario, I have access to a large variety of food stores. Within walking distance of my suburban home (yes, some suburbs are walkable!) I can count six grocery stores, a butcher, a bakery and an organic greengrocer. Only two of those grocery stores belong to a major Canadian chain. The others are independents who tend to compete well on pricing.

When I think of one of our vacations to the Maritimes, though, I remember being unhappy with the fruit and vegetable selections at both the big chain grocery stores in Bridgewater, Nova Scotia. The prices were between reasonable and high, but the quality was terrible. And many items I can easily get here were not even for sale.

Where you live will likely play a big factor in your grocery budget. If you have to pay $7 to get a bus to and from the store, that is another big cost that affects those that can least afford it.

Could I do this in another location though? I doubt it. The fruits and vegetables I buy almost always are purchased at the independent grocery stores. They have noticeably lower prices. I’m sure that many people who don’t live in a “food oasis” like this must pay much more for the same food.

What Will I Budget for Food Costs for Retirement?

I don’t know exactly what I should budget for food costs for retirement, but I know it will be more than $8.33 per day.

It’s especially important to remember that the $8.33 per day includes

Any food lost due to spoilage. (Ever open a carton of eggs and find one is cracked? Opened a head of lettuce and found brown leaves in the middle?)

Any food for special holidays such as a turkey, fancy dessert, cheeses.

Our retirement date is a moving target in part because we expect to get “retired” rather than to choose when to retire. This year alone, an entire tier of management, basically anyone 60 or older, has been offered a package to retire. (Those who don’t choose to accept the package are taking a risk that they may be simply “right sized” without any retirement bridge perks.) Who knows how bad it’s going to get? Still, I was looking at my XIC holdings the other day and began wondering roughly how much we could expect them to grow between now and retirement if that was, say, 15 years away.

XIC Is a Low-Fee ETF That Mirrors Most of the Toronto Stock Exchange (TSX) S&P Composite Index

XIC is a Blackrock iShares ETF. You buy units of the ETF on the stock market, just like shares of Bell or Enbridge. Unlike a mutual fund, the value of these units goes up and down throughout the day based on the value of the underlying stocks. Like a mutual fund, there is a management fee for these units: it’s low though at 0.05-0.06% a year.

I bought a bunch of XIC every month one year when I couldn’t spot any dividend paying stocks that I wanted to own forever offered at good prices. I figured I would be over-paying for some of the component stocks in the index fund, but under-paying for others so it should be overall beneficial.

Does XIC Pay a Dividend or Distribution? Can I Get Income from It?

XIC does pay distributions quarterly based on the underlying stocks. It yields about 2-3% a year although it’s not something you can actually estimate with any particular accuracy.

If you look under Performance, then Distributions, then Table, then Calendar Year, you can see the total annual distribution per unit for tax purposes. For the full years the unit has been offered, it’s varied from about 22 cents per unit to a high of 1.25 per unit. During those years, the price per unit has varied from about $10 to about $25.

What Capital Gain or Growth Can I Expect Over the “Long Term” For My XIC Investment?

I’ve been reading books and newspaper articles about planning for retirement and they use a wide variety of values for how much you can expect your long-term investments to grow.

I see things like “expect to grow 3% above inflation” and even “5% after inflation.” I’m always a bit skeptical of those numbers because I’ve been investing so long I’ve seen many market setbacks.

So knowing I bought my XIC units when the TSX was in the 15000 range and that it is still well below that this year (2016), I wondered whether “past performance could be used to predict future performance.” OK, I know it can’t. But I still wondered how XIC has actually performed over the long term.

First, I did a quick and dirty check looking at the values 15 years ago and today on the BMO InvestorLine website. That suggested a return of a bit less than 4.5% per year, not including the distributions. That suggested to me a return of 6-7% or so if you included the distributions.

They conveniently report the Total Return as an Average Annual return including distributions and changes to the NAV.

The total average annual return since inception, February 16 2001, is 6.02%. So my estimate was pretty accurate.

How Does the Total Average Annual Return for the Past 15+ Years Compare With the Rate of Inflation?

So if the return was 6.02%, how much of that was eaten up by inflation?

I went to the Bank of Canada website to see what they report the “average annual rate of inflation (%) / Decline in the Value of Money” was from 2001 to 2016.

They say that over 15 years, the rate of inflation was 1.83%.

(Anyone who actually owns and runs a home knows that the CPI tends to understate the actual rate of inflation for goods and services you actually need to survive, but it’s as good as I can get easily.

So What Can I Expect from My XIC for Long-Term Return After Inflation?

Ok, if I’m doing this correctly, that means that should future performance mirror past performance, which is very unlikely, then

6.02 % – 1.83 % = 4.19%

I really, really don’t think the data is accurate to two decimal places, so I’ll say “about 4%.”
In other words, I can expect my investment in XIC to grow about 4% a year for the next 15 years.

How Soon Will My Money Invested in XIC Double In Amount?

There’s an old estimating rule for how quickly your money will double in amount (not necessarily in value, as inflation plays a role in that.) You take 72 and divide it by the % that the money is growing each year.